Cashless Businesses and a Boundaryless Legislature

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As the budget rolls its way through the General Assembly, it’s useful to look for reminders about the political philosophy of our legislators.  In that vein, consider the legislation to ban cashless retail:

The General Assembly today passed legislation introduced by Rep. Mia Ackerman (D-Dist. 45, Cumberland, Lincoln) and Sen. William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket) that would protect the rights of customers to pay for things in cash.

“More and more retailers are shifting to cashless transactions in other parts of the country for various reasons,” said Representative Ackerman. “From a consumer perspective, this could have a negative impact on working class customers, senior citizens and college students who don’t have credit cards.”

The legislation (2019-H 5116A, 2019-S 0889) would make it unlawful for any retail establishment offering goods or services for sale to discriminate against a prospective customer by requiring the use of credit for purchase of goods or services.

Once again, we see legislators — led, in this case, by a real estate title examiner and a lawyer — who presume to set minute policy for every business in Rhode Island.  Even if one buys their argument that, all things being equal, it would be more just for businesses to accept cash, imposing that view as a blanket matter across the state makes it that much harder for people to find innovative ways to offer goods and services to each other.

Suppose, for example, there is a particular area prone to robbery.  Being able to advertise that there is never any cash on the premises might make the difference between whether a particular business finds it worthwhile to set up shop at all.  This problem is easier to understand if you think of a store that sells more-expensive products.

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Or think of online sales, which the legislation exempts from the rule.  In essence, this bill would make it more difficult for somebody to compete with an online business by providing some person-to-person interaction.  That innovator couldn’t set up shop unless he or she is willing to go so far as to create processes for accepting and handling cash, which also includes having change to return to the customer.

One could say not only that this legislation is dumb, but also that it is dangerous and economically destructive to have a legislature that believes it’s even within the appropriate scope of its authority.



  • Joe Smith

    but also that it is dangerous and economically destructive to have a legislature that believes it’s even within the appropriate scope of its authority.

    Well, you can believe the law is dangerous, but according to the US Government, it is within the scope of states’ rights to develop laws regarding private business and US legal tender within the confines of the state. Massachusetts has had the law since 1978 – and don’t we look to Massachusetts for all practices wonderful commerce and education wise?

    Hard to argue Mass economy has seen economic destruction in the 41 years under this law.

    https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx

    “There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.”

    The cost differentials between a brick and mortar and online hardly rest on the basis for taking cash versus not (given that exists now). Nothing prevents – even with this law – from a store having a “no bill over $X” policy” as well as easy “time lock safe” measures that convenience and other stores have employed historically to deal with these concerns. Also, the merchant fees, cost of data protection (assuming that’s being done!) or costs from failure to protect, and related items get priced into the goods and services just as much as say armored car (large volume) or trips to the bank for cash.

    I would think people would appreciate not living in a society where the government or others have full access to all my transactional data – especially when there have been plenty of cases of abuse/misuse/commercialization of that data.

    • Justin Katz

      It seems to me that your objections miss the point in important ways.

      * To say that legislation is within the scope allowed by the Constitution is different from saying that it is within the scope of what we ought to expect our legislature to do.

      * To say that this policy is a restriction on innovation isn’t to say that it’s the end-all-be-all, so it’s plausible that MA could have policies that keep them growing despite this law.

      * To argue that online retailers have many other advantages is not an argument for ensuring that there is at least one more.

      * Seeing no way in which this really hinders business, or stating why they ought to really like this restriction, is exactly the point of presuming to make blanket rules for everybody. By definition, innovations are difficult to anticipate.

      * Liking the ability not to use credit and therefore remain more or less anonymous is a definitely in keeping with my general perspective, but that a consumer might want to be able to pay cash doesn’t mean we should make that decision for everybody. (No, if government were to force the registration of all prepaid cards, or something, that would be different.)

      • Joe Smith

        Well, you say “appropriate scope”.

        I think the government has within its “promote the general welfare” mission the scope to protect the consumption ability of low income consumers without the same access currently to electronic banking and other methods for mediums of exchange.

        Moving to prepaid (more difficult to track) cards is an implicit tax (and a pretty regressive one at that) on consumers without the ability for traditional credit/debit card access.

        I also think this general law is not mandating consumers use cash, merely the ability to do so – retailers can decide the degree that making cash transactions difficult (for example only one register/kiosk, no bill over $20) will effectively balance efficiency in costs versus loss of business.

        innovations are difficult to anticipate. Maybe..seeing where a cashless society is heading isn’t..for example, maybe there is a backlash against tracking my ammunition purchases at point of sale – easy to get around if I’m required to pay in a traceable medium of exchange.

        I generally don’t see this as a favor by the government – an entity I fear wants a more cashless society to give more monetary policy leverage to the central bank, more ability to collect taxes, and more power to law enforcement (some perhaps good reasons but dangerous nonetheless).

        Perhaps the natural evolution (after all, we moved from a barter economy to a commodity money one and then a fiat money world) will take society there; but I’m okay with introducing a little inefficiency to err on the side of equity.

  • Rhett Hardwick

    I have noticed that a great many governmental agencies in Massachusetts no longer accept cash. The reasons vary from employees stealing the cash to the “fees” associated with use (how much “fee” can the state pay out of a $10.00 filling fee?). It seems to contradict “legal ender for all debts, public and private”. This has caused me to call the Treasury Department to find out what that message on our bills meant. They told me they didn’t know.

    • Joe Smith

      The issue is lack of enforcement – an article from the Globe a couple years ago noted that enforcement is more reactive than proactive in nature – in other words, the cranky consumer asserting their rights or an ACLU type organization calling out a business.

      Also, in Mass, the law left open to interpretation the definition of “retail” – although technically public organizations have to take cash (ie. the electronic tolls you can pay in cash later/in advance).

      • Rhett Hardwick

        A number of years ago, I tried to pay a filing fee of $10, in cash, at the Secretary of State’s office (Mass). I understood they had lowered the acceptable amount of cash from $25, to $10.00. Unknown to me they had eliminated cash. I offered a $10.00 bill and got this reaction “Hey Joe, we got another a–hole”. I had learned about the reduction to $10 when I renewed my Notary license. Fortunately, it was a guy. So, I gave him $10, went out the door, came back and hit him with another $10, then made the same trip and produced $5. Attleboro will not accept cards for taxes, cash, or check. I expect they don’t want to pay the “Merchant’s Fee”. They made themselves nationally famous a few years ago for sending out a tax bill for $.08.

        • Joe Smith

          LOL..I’ve seen a town’s check ledger where checks for $.04 were cut. I got into a beef once with a town in MA over property tax bill. They cashed the check late and hit me for a late fee claiming the date on the check itself wasn’t proof and I didn’t have any tracking on the letter. So I was going to pay it in pennies, but I was advised that only federal reserve notes have the “all debts” imprint so might be a waste of time.

          Also, a neighbor advised me if I really wanted to get into a pissing contest over $20 with folks who could make life difficult for a resident, especially a new one with no family ties in the community.

          • Rhett Hardwick

            I pay RE taxes in Mass and have had reason to look at the “penalties”. The law doesn’t really allow them any “judgment”. IIRC, the Collector can “write off” amounts of less than $10.00.

  • Christopher C. Reed

    When we first arrived in RI back in the ’90’s it was kindly explained to us that there was a two-track economy here. The one that we we familiar with, checks, credit cards, receipts and double-entry bookeeping, and the other one…cash, on the barrelhead, under the table, whatevah.

    Today the bulk of the cash economy is resides in immigrant communities.
    The average American (United States of Amazon) consumer has long since surrendered privacy for convenience.

  • ShannonEntropy

    My main objection to these bills is that they restrict Liberty rather than
    retain / expand it

    Imagine a law that required a business to accept say Bulgarian Food Stamps as payment. How many votes would that one get ??

    Let’s take a challenge to the must-accept-cash-laws all the way to the SCOTUS

    They have been notoriously hostile to restricting individual liberties… and in fact even declared the learned-in-first-year-law-school-principle that corporations are “persons” legally in the Citizens United case and thus businesses are entitled to same rights & privileges a human citizen has

    See: Citizens United v. Federal Election Commission, 558 U.S. 310 (2010)

    p.s. To JOE :

    I was going to pay it in pennies, but I was advised that only federal

    reserve notes have the “all debts” imprint so might be a waste of time

    Coins are also acceptable to pay “All debts public or private” … but Good Luck paying your taxes with pennies !! Most Gum-mint employees have no more knowledge about The Law that your average second-grader has

    But if you want some laughs, show up at city hall with a wheelbarrow full of pennies and show them this as proof they HAVE to accept your payment =>

    https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx

    • Rhett Hardwick

      “This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.” I am not following this. If cash is a “valid and legal offer of payment” and you make such an offer, which is not accepted, it would seem to me you are off the hook. A universal declination to accept cash would make currency worthless. Of course, it is “FIAT” currency.

      • ShannonEntropy

        This issue has in fact come up in places that try to go cashless*. Somebody orders and eats a bunch of food and then says they only have cash when it comes time to pay

        They usually get the meal free but are told “donut try this again”

        A much more common prablem is places that donut accept credit cards. J.P. Spoonem’s on Broad St in Edgewood is one. They then have a private ATM in back where they nick for an ATM fee. Neat trick, plus who knows how much of all that cash they launder; or might the entire place actually be in the cash laundering business ??

        That’s the beauty of cash: there’s no way even the IRS can tell

        * Sorry; I cannot recall the source of the article I read about this a few months ago

        • Rhett Hardwick

          In my post above, relating to the Mass. Secretary of State, I knew the lawyer for that department. I asked if the employees were stealing the cash, he indicated that was the case. I wonder if that is a bigger problem than we know.

          • ShannonEntropy

            You & Joe must be nuts to be paying gum-mint taxes / fees with cash… esp RE taxes

            You are just begging to wake up one day to find your property on a tax sale list and when you check your tax bill discover that what you thought was a “PAID IN FULL” stamp is a picture of Minnie Mouse so there’s no proof you ever did in fact pay your taxes and no way to trace into whose pocket your cash disappeared

            I pay my RE taxes in person once a year in September with a certified bank check with the control #s listed on the memo line; and I would recommend that you guys do likewise

          • Joe Smith

            I do it in person and get a receipt..my other property is done by escrow (couldn’t fight that with the lender and the interest rate lock of 3% was too good on a 30 yr to pass up) so I assume they mail a check (although I still check the balance on line with the town to see the payment).

      • Joe Smith

        The key word being debt – debt requires an agreement (or a judgment) so a private business with no governing state or local ordinance can claim a “no cash” policy if clearly noted to a potential customer constitutes part of the agreement for good or service provision.

        It might be interesting though on a lawsuit against a public entity – especially the nuisance ones where government bodies often settle to avoid the legal costs – to pay the folks in dollar bills..

        Yes, fiat money only has value if it is accepted as a medium of exchange, store of value, and unit of account..but one could argue sitting in a demand deposit or electronic/card form is still “cash” – just not currency in circulation.

        You see in Sweden though the pendulum swinging back from the push for a cashless society.. a “prepaid” card still has a serial number on it that can be tracked to the point of sale of the card and thus the date/time and if cameras are present.. Of course, the US could pull what India did (although not without some major hiccups) and just mandate a new $100 bill and you have to exchange in person your old one to get a new one..unless you have funds on deposit in the financial system..

        India’s experience seemed only partially successful, but maybe that’s because so much of the Indian economy was cash based..

  • Rhett Hardwick

    I think I hear the jingle of low denomination bit coins from those who prefer privacy.

  • Raymond Carter

    “Money is coined liberty”. Cash-free is the road to totalitarianism.

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